82 – Co-Production and Managed Competition in Mixed Quasi-markets

In this paper, we provide a very simple model to shed light on the issue of managed competition in mixed quasi-markets (i.e. regulated markets in which social and for-profit firms coexist).

In doing this, we consider the literature on mixed oligopolies as a reasonable reference point and try to enrich it with the idea of quasi-market. Firstly, our results show that social firms serve the relatively richer portion of the population.

Only relatively poor consumers buy units of service from the profit-oriented firrm’s production costs. Secondly, the socially-preferable form of managed competition is to introduce coproduction practices and, hence, to raise profit-oriented firm’s production costs.

The diffusion of coproduction paradigms ensures maximal service quality and eliminates mark-up from the market.

JEL Classification Codes: I18, L13, L84

Keywords: Quasi-Markets, Competition, Regulation, Mixed Oligopoly, Social Firm